Panel scraps stem cell discovery-sharing rule

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Contra Costa Times (California)

SACRAMENTO, CA — A panel deciding what benefits California taxpayers will receive from their $3 billion investment in stem cell research agreed Friday to remove a discovery-sharing requirement that the biotech industry vigorously opposed.

Biotech leaders had argued that being forced to freely share their patented inventions with California research institutions could stymie stem cell research by removing financial incentives for companies to get involved.

“We do not want to hurt this industry,” said Jeff Sheehy, a member of the intellectual property task force of the state’s stem cell agency. “We have a policy that industry has told us will not work for them.”

Yet the task force did not give industry leaders everything they wanted. It decided to keep intact requirements that a share of royalties be returned to state coffers, that companies adopt plans to provide access to medical therapies for uninsured people, and that the stem cell agency have the right to suspend exclusive licensing agreements if companies do not make inventions available to the public in a timely manner.

The policy deals only with firms that obtain a licensing agreement with a university or nonprofit institution. A separate policy for firms that receive stem cell research grants directly from the state will be set at a later date.

At issue is what return California taxpayers will receive on their sizable investment in stem cell research, approved with the passage of Proposition 71 in 2004.

Supporters have high hopes for the research, believing it will lead to new therapies and maybe even cures for a host of debilitating diseases.

“All Californians must have affordable access to the results of the research they pay for,” said John Simpson of the Foundation for Taxpayer and Consumer Rights, a consumer watchdog group.

The policy will now go to the full stem cell agency board for a final vote after a 15-day comment period. It deals only with universities, other nonprofits, and companies that sign licensing agreements with such institutions.

A separate policy for biotech and other commercial firms will be considered at a later date.

The task force previously decided that those who receive state grants will own the intellectual property they develop.

But it also wanted to make sure that information will be disseminated broadly so progress occurs as rapidly as possible. To accomplish that goal, it adopted a preliminary policy requiring that companies provide university scientists and others engaged in noncommercial research with access to state-funded inventions and research tools free of charge.

The goal was to avoid having stem cell researchers subjected to lawsuits from companies complaining they were infringing on a patent.

But a host of biotech leaders wrote to complain about this policy, arguing that it would cause venture capital firms to balk at getting involved.

“Under those circumstances, we believe no private funding will be used to license the invention and none of the energy of the commercial market will be made available to enhance, manufacture, advertise, disseminate or support it,” wrote Greg Lucier, chairman and CEO of Invitrogen Corp.

Task force Chairman Ed Penhoet said he agreed to eliminate the provision, even though he supports it, because many researchers and companies already share such discoveries with others. But the stem cell agency will revisit the issue if a problem develops, he added.

Simpson of the Foundation for Taxpayer and Consumer Rights said the policy should not have been eliminated.

“I’m disappointed that they just yanked this,” he said. “I think it needed to be tweaked. “This was too quick of a cave-in to biotech’s concerns.”

The task force decided to retain a policy requiring that universities return to the state 25 percent of the royalties they receive in excess of $500,000 from licensing an invention.

Because universities are not in the manufacturing business, they license their discoveries to private firms that commercialize an invention. Such firms typically pay the university a royalty of 3 percent to 10 percent of their revenue. The state’s share would come out of that amount, so it would amount to about 1 percent to 3 percent of a company’s revenues.

Before a company makes a product available to the public, it would have to have a plan in place to provide access for uninsured California residents. Therapies purchased with public funds would have to be provided at prices no higher than the federal Medicaid price.

The stem cell agency would have “march in rights” to intervene if a company fails to follow its access policy or make its therapy available for public use.

To ensure information is disseminated broadly, within 60 days of publication of research in a scientific journal, investigators must write a 500-word summary in lay person’s language to be posted on the stem cell agency’s Web site.
Reach Sandy Kleffman at 925-943-8249 or [email protected]

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